First Time Buyer Guide

Shared ownership

A smaller share can make the purchase price look more manageable, but the mortgage is only one part of the monthly cost. Rent, service charges and the lease continue to shape what the home costs and what you can do with it after moving in.

Listings can make shared ownership homes look as though they all work in the same way. The schemes and terminology differ between England and Wales, and the provider's rules and the lease for the particular home are what determine the arrangement you would actually be buying.

Working out the full monthly cost

Combine the mortgage on your share, rent on the provider's share, service or estate charge, buildings-insurance contribution and any other lease charges. Ask how each amount is reviewed and model what the total could become, not only today's figure.

You normally provide the deposit as a percentage of the share being purchased, but you are taking on obligations relating to the whole home through the lease.

How the lease affects repairs and alterations

The lease sets the term, repair responsibilities, restrictions, rent review, service charge, permission for alterations, staircasing and sale process. Houses as well as flats can be leasehold under shared ownership.

Ask who repairs the inside, structure, roof, services and shared areas, and whether any initial repair support applies. Do not assume the provider pays most repairs because it owns a larger percentage.

What is involved in buying a larger share later

Buying another percentage of the home from the provider is known as staircasing. For example, somebody who initially owns 25% may later be able to buy another 25%, taking their share to 50% and reducing the rent charged on the provider's remaining share.

Staircasing normally requires a current valuation and brings valuation, legal, mortgage and administration costs. The price of the extra share depends on the home's value at that time, rather than the price you originally paid. Ask how far you may staircase, whether minimum increments or other restrictions apply and what happens to the rent and tenure as your share changes.

How improvements may affect both cost and resale value

You may need permission before altering the home. When buying more shares or selling, the valuation rules determine how approved improvements are treated.

Get consent and understand the valuation method before spending on work you expect to add value.

How a shared-ownership resale works

The provider may have a nomination period or other right to find a buyer before the home can be marketed more widely. Valuation requirements, buyer eligibility, lease length, fees and service-charge information can affect time and saleability.

During a provider-led nomination period, the sale price is normally based on a current RICS valuation. If buyers will not pay that amount, you may not be able to reduce the price as freely as you could in an ordinary open-market sale. The provider may require a new valuation or need to agree how a lower price affects its share. Depending on the lease and provider's rules, a seller who accepts less may have to absorb some or all of the reduction rather than passing the same discount to the provider.

For homes governed by current Homes England guidance, a provider which lets the nomination period expire or waives it loses its right to nominate a buyer and control the later open-market price. Older leases, Welsh schemes and individual providers can work differently, so ask for the resale policy, nomination period, valuation rules and treatment of price reductions before you buy. A home which is valued above what local eligible buyers can afford may otherwise take longer and be harder to sell than you expected.

Additional checks for new-build homes and flats

A new shared-ownership home still needs scrutiny of build completion, warranty, snagging, estate arrangements and future charges. A flat still needs leasehold accounts, major-works and building-safety evidence. The scheme does not replace those checks.

How tax and benefits depend on individual circumstances

Property transaction tax can be calculated in different ways for shared ownership and differs between England and Wales. Benefit support for rent or service charges depends on personal circumstances and current rules. Use the official scheme and tax guidance, then ask the conveyancer or adviser to apply it to the transaction.

What to check for your purchase

  • Add the mortgage, rent, service charge and every recurring fee when working out the monthly cost.
  • Check how the rent and service charge are calculated and how they can increase.
  • Read the lease to find out who pays for repairs and which alterations need permission.
  • Before planning to buy a larger share later, check how it will be valued and which fees you will pay.
  • Ask the housing provider how a later sale would work, including the nomination period, who sets the price and what happens if the home will not sell at the valuation.
  • If relevant, also check the new-build warranty, lease terms and building-safety documents.
  • Check the current shared-ownership and property-tax rules for the country where you are buying.